We’re often asked how we paid off $51,000 in credit card debt. Everyone’s looking for that magical tip or trick to get out of their financial troubles. But just as important as how we paid off our debt is how we acquired it.
Save for a few exceptions, it’s not easy to build up that much credit card debt. It’s essentially 51,000 bad decisions over a combined 21 years between two supposedly smart people (“supposedly” being the operative word). How did we successfully achieve such a ridiculous feat?
We had a lot of fun acquiring it. We did five-star trips to Vegas and Mexico. We hit Winter Music Conference in Miami two years in a row before it was trendy. My denim collection was worth more than my 401K, and we never missed a party.
We now realize we were overspending in our 20s and 30s to overcompensate for feeling inadequate in our teens. Many in the queer community didn’t and don’t necessarily have it easy at home or at school. Even today, nearly 40% of homeless youth identify as LGBT and many youths are homeless because they’re queer.
While we were never homeless, we experienced our own discrimination. The offhanded slurs people directed toward us in our early teens chipped away at our self-worth. When we found our queer community in our 20s and 30s as our careers took off, we reveled in it — maybe too hard.
This struggle with self-worth isn’t unique to the queer community. Because we understand this struggle and how it can push you to spend as a way of satiating past and current feelings of inadequacy, we have three questions to help you identify if you’re doing the same.
1. Are You Competing With Mr. & Mr(s). Jones?
Kristen Wiig used to play a character on “Saturday Night Live” named Penelope, who tried to one-up anyone who had anything remotely good to say about themselves or anyone other than Penelope. This question is for those who, at least internally, are Penelope.
Mr. & Mr(s). Jones may be your neighbors, coworkers, friends or family. If at any time someone else’s new purchase, upgrade, expansion or improvement makes you buy or do something of your own to keep up, you’re overspending to overcompensate, Penelope.
2. Is Show & Tell the Best Part of Buying?
Money is a tool to help us meet our basic needs (food, clothing, shelter). When we spend money on things beyond what covers our basic needs, it should improve our or others’ quality of life. If your real satisfaction comes from showing off your purchase, rather than from the purchase itself, you’re telling others you’re at least as good as them, if not better.
Of course, if you need things to tell others you’re at least as good as them if not better, then you don’t really believe it.
They probably don’t believe it, either.
We’ve all spent within reason to make a bad day better or enhance a good one. If you spend to feel better than others, you’re spending for validation.
3. Are You Foregoing Financial Stability for Temporary Pleasure?
Surveys show a large portion of Americans are financially unprepared for retirement, and 47% of Americans couldn’t manage a $400 emergency without selling something or borrowing money, according to the Federal Reserve. On the flip side, auto loans, mortgages and credit card balances continue to get bigger. Many are living for today and sacrificing tomorrow.
If, like me at one time, your wardrobe is more valuable than your 401K, you may be foregoing financial stability for temporary pleasure. If your home looks like a page out of Dwell, but you couldn’t pay cash to replace your boiler if needed, you’re overspending to overcompensate.
Within reason — reason being defined by your financial state — a little spending to feel good isn’t bad. It’s when the spending or the things in your life dictate your happiness that you’re in trouble. And if you’re doing that spending on credit cards, it can take you a long time to pay off that debt.
If one or more of these questions confirm to you that you’re overspending to overcompensate, congratulations: Identifying the problem, as we did, is the first step. The next step is to identify what you truly want in life. As we’ve shared many times, that’s the most critical question to any success.